Archive for the ‘Gold Standard’ Category

The US dollar as reserve currency has increasingly come under fire.. In the abscence of something concrete backing it , a currency has a nebulous basis of value and exchange. The International Monetary Fund’s special drawing rights ( SDR) is a similar based conceptual currency . Gold alone has been a physical historically accepted standard . So it makes sense to return to a gold standard but this would cause an ajustment in the way all the world’s economies to come to a common equation. Of course, not all economies ( read: certain leading Countries, in particular the USA ) would hasten to embrace that adjustment and loss of power, control and position in the world .

” “James Grant, whose Interest Rate Observer newsletter is followed by many big institutional investors, argues on Bloomberg TV that the gold standard is a better alternative for money management and that the historical evidence is incontrovertible.“The U.S. Treasury market is pretty fine,” he said about bond traders’ apparent lack of concern about the ongoing U.S. debt ceiling debate.That’s a view he admits is a bit of surprise. “I’ve been bearish on Treasuries for a very long time,” Grant said. “People have come to view Treasuries as intrinsically safe when in fact they’re pieces of paper emitted by a government that is cash-flow negative and the printer of the world’s reserve currency.”While Washington, D.C., isn’t at the forefront of moving to a gold standard, “This is not a threat, it’s not a promise, it’s going to happen.”Failing to move to a gold standard will result in “more of what’s happening today,” Grant added.“We have a credit card and the gold standard would be our debit card,” he said.” ”